What is spot trading in crypto?

Spot trading is one of the most basic ways to trade or invest in crypto. Many new investors and traders start their crypto journey by interacting with the spot market. In this article, CMC Academy dives into what spot trading is, how to trade spot markets, and its risks and benefits.

What is the alternative to crypto spot trading?

The main alternative to crypto spot trading is known as futures trading. In the futures market, a trader is betting on a derivative of their crypto asset of choice rather than taking ownership of the asset directly.

What is a spot market?

Another type of spot market is found in over-the-counter (OTC) trading. OTC trades happen when a buyer and seller transact directly, without a third party or trading platform to oversee the trade. The two parties may choose to transact assets at any price they see fit, whether below or above the market price.

What is spot trading in the OTC market?

Spot trading in the OTC market uses multiple communication methods to organize trades, including phones and instant messaging. OTC trades have some benefits from not needing to use an order book. If you’re trading an asset with low liquidity, such as small-cap coins, a large order can cause slippage.